Advisory Committee on Tax Exempt and Government Entities (ACT ...

Governmental Relationship and Communication Between the Internal Revenue Service and Indian Tribal GovernmentsI. EXECUTIVE SUMMARYThe Federal Government maintains a government-to-government relationship with over560 federally recognized Tribes each with their own unique culture and traditions.There are many challenges to effective government-to-government relationships withTribal Governments, with effective communication and overcoming a long history ofbasic distrust by the Tribes being key challenges.The IRS, like all other federal agencies, must relate to its Tribal Government customerswithin a government-to-government relationship. While the IRS Office of Indian TribalGovernments (“ITG”) works hard to maintain and enhance these government-togovernmentrelationships, during our research for last year’s report the ACT discoveredsome areas of concern in these relationships that needed further analysis. This reportwill highlight areas of the IRS’s government-to-government relationships with Tribes thatappear to be working and those areas that need improvement, in some casessubstantial improvement.Consultation is a cornerstone of the Federal Government’s government-to-governmentrelationship with Tribes. We have serious concerns regarding the lack of anypublication or implementation of the Department of the Treasury’s little-knownconsultation policy applicable to the development of regulations affecting TribalGovernments. The Treasury Department policy should be publicized to the TribalGovernments, as well as fully implemented. There is no excuse for the TreasuryDepartment’s apparent conclusion that the policy did not apply with respect to a numberof important regulatory initiatives that will have profound impacts on TribalGovernments.Likewise, we have serious concerns regarding the IRS’s long delay in adopting its ownconsultation policy, as it informed the Tribes it was committed to do during a nearly twoyearprocess that took place in 2003 and 2004. The IRS should resume its efforts toadopt the consultation policy that was drafted by a joint IRS-Tribal working group andcirculated to all of the Tribes in 2004, for application to matters affecting the Tribes towhich the Treasury Department policy does not apply.We also have recommendations for improving some of ITG’s existing mechanisms forensuring strong day-to-day relationships with Tribal leaders and Tribal financepersonnel on matters of more routine tax administration. We believe that theseimprovements will provide a better environment for carrying out true and respectfulgovernment-to-government relationships with the Tribes, and for achieving maximumtax compliance. In addition, in an improved environment, Tribes will have a better forumfor raising their concerns on tax administration and policy matters, having them heard,and having them “trickle up” or “trickle over” from the specialist level to the Director ofITG to other divisions and officials in the IRS and the Treasury Department ifappropriate, which will facilitate meaningful consultation. The most significant of theserecommendations, all of which are explained in more detail below, are as follows:ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 1